P&G, Colgate sales up; consumers return to brands

In this photo made Dec. 8, 2009, Tide Detergent, a Procter & Gamble product, is seen on display at Costco in Mountain View, Calif. The Procter & Gamble Co. sees recession-pinched households responding to price cuts, promotions and new versions of its products, as the maker of Pampers diapers and Gi

/ AP

In this photo made Dec. 8, 2009, Tide Detergent, a Procter & Gamble product, is seen on display at Costco in Mountain View, Calif. The Procter & Gamble Co. sees recession-pinched households responding to price cuts, promotions and new versions of its products, as the maker of Pampers diapers and Gillette shavers said Thursday, Jan. 28, 2010, its sales are growing. (AP Photo/Paul Sakuma)

In this photo made Dec. 8, 2009, Tide Detergent, a Procter & Gamble product, is seen on display at Costco in Mountain View, Calif. The Procter & Gamble Co. sees recession-pinched households responding to price cuts, promotions and new versions of its products, as the maker of Pampers diapers and Gillette shavers said Thursday, Jan. 28, 2010, its sales are growing. (AP Photo/Paul Sakuma) (/ AP)

DAN SEWELL, AP Business Writer

Big brands are back.

Two of the world's most familiar consumer products companies, Procter & Gamble and Colgate-Palmolive, say sales are improving for their toothpastes, soaps and other household items.

They're using promotions, tinkering with prices and rolling out new versions of popular lines to attract cash-strapped shoppers who had been turning to store brands or other cheaper options. They're also benefiting from consumers in growing overseas markets such as Brazil and China.

Both companies reported better-than-expected earnings. Colgate-Palmolive profit rose 27 percent and sales rose 11 percent last quarter, while P&G said sales were up 6 percent and growing. On a bleak day for Wall Street, Colgate shares fell 40 cents, to $79.99, while P&G rose 87 cents, to close at $61.68.

The companies reported successes with new products, such as Colgate's disposable Wisp mini-toothbrush and P&G's Tide anti-stain laundry additive.

"For both of these companies, their brand strength is very, very strong," said Jack Russo, an Edward Jones analyst. "Both continued to innovate with new products, and they promoted and advertised their products more."

He said while P&G and Colgate-Palmolive continued to reap growth from emerging markets, they also showed improvement in the United States and other developed countries. That indicates efforts to counter shoppers trading down to store brands or other cheaper options are working.

A budget-minded mother of three in suburban Cincinnati said she sees more P&G discount offers and is bypassing store brands to stock up when she sees a bargain on something like Pampers baby wipes.

"Sometimes with the promotions, you can get their products cheaper than the store brands," said Andrea Deckard of Monroe, whose "Mommy Snacks" blog shares money-savings tips. "I have very few brand loyalties, but if all other things are equal, I would choose the P&G brands."

Cincinnati-based P&G said organic sales - a key gauge that excludes acquisitions, currency fluctuations and other such effects - were up 5 percent for its second quarter. The company Thursday raised its full-year forecast to a range of 3 to 5 percent for that measure and for the current quarter projects 4 to 6 percent organic growth, a return to pre-recession rates.

Overall, P&G sales rose 6 percent for its second quarter, a turnaround from sales slumps amid the recession. Its profit slid 7 percent on a lower gain from selling business lines, but when adjusted rose with help from higher prices overseas.

P&G's earnings were $4.66 billion, or $1.49 per share, on sales of $21 billion.

The world's largest consumer products maker has courted consumers with different approaches. P&G said the new Tide Stain Release should hit $100 million in sales in its first year. And in October, P&G cut the price of Cheer detergent by 13 percent to offer it as a bargain brand against cheaper competition.

"It's not one size fits all," Jon Moeller, the chief financial officer, told analysts on a conference call. He said such premium products as Gillette Fusion shavers and Olay Pro X skin care also had good sales, indicating that consumers will pay higher prices if they think they're getting good value for their dollar.

P&G officials reported strong gains in China for products such as Pantene and Head & Shoulders shampoos and Crest toothpaste.

Colgate-Palmolive, whose namesake toothpaste and brushes are less vulnerable to trading down because people tend to stick with their favorite toothpaste, than items like P&G's toilet paper and diaper lines, said shoppers bought more of its oral care products, soaps and body washes.

Its fourth-quarter revenue was up more than 11 percent, to $4.08 billion. In Latin America, sales climbed nearly 23 percent and operating profit rose 27 percent, helped by cost-cutting and higher prices.